The place to be for finalizing international mass claims

A recent judgment (January 17, 2012) by the Amsterdam Court is the next step in a development which has been going on for a number of years now and which makes the Netherlands increasingly attractive to many international claimants as the jurisdiction in which to conclude terms of settlement in cases involving mass claims without having to formally issue proceedings.

The 2005 Act

It all started in 2005 when a new Act introduced a modern system for collectively settling mass claims.

This Act is unique in that it provides for an easy way to make an out of court settlement which is binding upon all the parties involved. A similar outcome is achievable in the USA through the well known “class action”, but this route has to start with court proceedings; compare the position under Dutch law which allows the parties to negotiate terms of settlement and have those terms ratified by the court without having to issue proceedings.

The Dutch system

The Dutch system is simple and effective. It allows the parties to conclude the terms of an out of court settlement which becomes formalised in an order of the court. Once concluded, the terms of the settlement may be filed for court approval with the higher court in Amsterdam which has exclusive jurisdiction in these matters; if such approval is obtained, the settlement becomes binding upon all known and unknown parties and individuals of the class, unless they choose to ‘opt out’ of the settlement which they may do within a limited period of time as determined by the court. The Amsterdam court will not grant its approval for such an out of court settlement unless a number of conditions, which are set out in the Act, are met; for instance (i) the compensation to be paid must be reasonable; (ii) sufficient security for the payment of any compensation must have been provided for and (iii) the bodies attending to the interests of the parties and the individuals involved must be sufficiently representative of the class.

Next step

Recently, proposals have been put forward to modify the Act so as to make the Dutch system even more accessible to foreign parties in the future, for instance by allowing the internet to be used as a means to make the out of court settlement known to all parties and individuals who may belong to the class.

Latest Dutch case law

The recent judgment (January 17, 2012) of the Amsterdam court has made it clear that the Dutch proceedings may also be used in cases in which there are non-Dutch parties involved. Obviously, there must be a certain Dutch interest/connection, but it is not yet fully clear how substantial such an interest or connection needs to be. For instance, in the latest Amsterdam court case there were no more than a few hundred Dutch individuals who had suffered a loss as compared to approximately 12,000 individuals from other countries but this disparity did not cause any legal obstacle and the out of court settlement was accepted by the court and declared binding, both for the Dutch and the non Dutch individuals.

USA and The Netherlands – a partnership in finalizing mass claims?

The current position in the USA is that the American courts will not readily accept jurisdiction over class actions involving non-Americans. The new Act may lead to a situation in global mass litigation whereby a two-step approach is followed: (i) class action proceedings are initiated in the USA on behalf of the American individuals in the class and (ii) the successful outcome of the American class action proceedings is then used to negotiate an out of court settlement for the non-Americans, the terms of which are then approved by the Amsterdam court and declared binding upon all non-American parties and individuals (unless they choose to opt out). This mechanism is ready to be used now and will work even more effectively if the latest changes to the Act are accepted by the Dutch parliament; the only test being that there is ‘some’ Dutch interest/connection involved. There is no doubt in my mind that, in most cases, clever attorneys will find this an easy hurdle to pass.

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